Interpreting Market Internals in Context – Drills

Drill 1
In this market situation, the first chart shows that we have broken down sharply in the morning of the most
recent day on the right edge of the chart. The second chart shows a closer look at the price action during that
morning and what the market internals were doing. What do you think is the likely direction of the market
going forward in this day? Provide your rationale.

Chart 1

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Chart 2

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Drill 2
We are in a larger term up-trend (not shown here), and have been experiencing an intermediate term
downtrend recently. However, in the last 2 days we see that we have been bouncing sharply. It's unclear if the
intermediate term downtrend is reversing and we're continuing the up-trend, or if this is just a temporary
bounce, after which the intermediate downtrend will resume. The second chart shows what is happening on
this current day. What is likely to happen for the rest of the day? Provide your rationale.

Chart 1

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Chart 2

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Drill 3
In this market situation, we are not testing a key reference area. Instead, we are breaking out of one, as we
can see on the right edge of chart 1. In chart 2, we see the market internals at that point of the day. What do
you think is likely to happen going forward in this day? Provide your rationale.

Chart 1

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Chart 2

Copyright © 2012 OpenTrader Training, LLC. All rights reserved.